The amyloid-b protein (Ab) is the initial, primary, and pathologic component of amyloid plaques observed in the brains of individuals with Alzheimer's disease (AD). Production of Ab is initiated by a b-secretase that cleaves the amyloid-b precursor protein (APP) at Ab's N-terminus (the n-site). A recently identified aspartyl protease, BACE, cleaves the J3-site and at residue 11 within the Ab region of APP. BACE likely makes a significant contribution to the pool of Ab in the brain and is an important target for treatment of AD. In preliminary data, we characterize a homologous aspartyl protease, BACE2, which we demonstrate to cleave APP at its p-site, and, more efficiently, at a different site within the Ab region of APP. A physiologic role for BACE2 is implied by data presented demonstrating that the Flemish mutation of APP, implicated in a form of familial AD, is adjacent to BACE2's internal Ab cleavage site and markedly increases b-site cleavage by BACE2. BACE and BACE2 respond identically to most conservative b-site mutations that either increase or decrease 13-site cleavage. Thus these enzymes are highly similar, but as preliminary data suggests, it may be therapeutically useful to inhibit BACE specifically. To that end we have recently generated several mutations of APP that differentially affect BACE and BACE2. Combining these mutations, we have generated APP variants that are cleaved much more efficiently than wild-type APP by BACE, but less efficiently by BACE2. Peptidomimetics based on this APP variant may be helpful in the design of molecules that specifically inhibit BACE proteolysis. The aims of the application are: 1. To further describe substrate preferences of BACE and BACE2 through mutagenesis of APP and to use data so obtained to design additional APP variants that are differentially cleaved by these enzymes. 2. To describe the BACE and BACE2 determinants of their distinct specificities through mutagenesis of their respective substrate binding regions, and through the exchange of BACE and BACE2 residues within these regions. 3. To characterize the nature and role of the sulfate moieties observed on BACE.